Playing Chess with Putin

“What’s it like playing chess with Obama?” asks a top aid of Russian president Vladimir Putin.

Putin replies, “It’s like playing chess with a pigeon. First it knocks over all the pieces, then it shits on the board, and finally it struts around like it won.”

Now, Putin hasn’t actually said this on record. It’s just a popular joke circulating in Russia.

But I wouldn’t be surprised if he really did say it. It’s not far off base.

Putin outmaneuvered the West in Ukraine and most recently in Syria. Most importantly, he has outflanked Western sanctions through increased financial and economic cooperation with China and other Eurasian powers.

No matter what happens in the West, Russia’s recent power plays are creating tectonic shifts in geopolitics. This could be the largest shift in global power since World War II.

Ultimately, this could threaten the U.S. dollar’s role as the world’s premier reserve currency. That would have huge negative implications for your personal freedom and financial prosperity.

Will Russia End the Unipolar World?

Actually, it’s not just Russia we have to watch. China, Iran, and other Eurasian powers are working with Russia on an ambitious goal. They’re trying to end U.S. dominance in global trade, finance, and military power.

These countries want to create what Russian officials call a “multipolar world.” It would replace the unipolar world that’s existed since the early 1990s, when the Soviet Union collapsed. The U.S. has been the world’s sole superpower ever since.

In short, Russia and its partners want to completely redraw the lines of global power. Here’s how they’re doing it…

First, there’s China’s New Silk Road. It’s the biggest and most comprehensive infrastructure project in all of human history. The plan is to link Asia to Europe via modern land transit corridors.

The project includes high-speed rail lines, modern highways, fiber optic cables, energy pipelines, seaports, and airports. Much of this new infrastructure will flow through Russia.

If everything goes as planned, the New Silk Road will be a reality by 2025.

This will free Russia, China, Iran, and others from dependence on ocean transport. At that point, control of the high seas, which the U.S. has had for many decades, won’t be nearly as important.

In addition to the New Silk Road, a set of interlocking international organizations is emerging. These new organizations are supporting Russia’s plans for a multipolar world.

Trade – The Eurasian Economic Union

The Eurasian Economic Union (EEU) is a Russian-led trading bloc.

The EEU allows for free movement of goods, services, money, and people through Russia, Belarus, Kazakhstan, Kyrgyzstan, and Armenia. It’s gradually expanding as countries along the New Silk Road remove trade barriers.

Security – The Shanghai Cooperation Organization

In the military and security realm, there’s the Shanghai Cooperation Organization (SCO). It could become a NATO of the East.

Current members include Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. India and Pakistan will join by 2016. Iran is also likely to join in the future.

A Parallel International Financial System

China’s Asian Infrastructure Investment Bank (AIIB) will provide funding for international infrastructure projects. It’s an alternative to the International Monetary Fund (IMF) and World Bank, which are both dominated by the U.S.

The BRICS countries – Brazil, Russia, India, China, and South Africa – all support Russia’s goal of creating a multipolar world. Like the AIIB, the BRICS New Development Bank (NDB) is an international financial institution based in China. It’s another alternative to the IMF and World Bank.

The NDB and AIIB will complement, not compete with, each other in financing New Silk Road projects. The NDB will also finance infrastructure projects in Africa and South America.

It’s important to note that the NDB will use members’ national currencies, not the U.S. dollar. It won’t depend on U.S.-controlled institutions for anything. This reduces the NDB’s exposure to U.S. pressure.

The BRICS countries are also looking to build an alternative to SWIFT, the major international payments system.

SWIFT is truly essential to the current international financial system. Without it, it’s nearly impossible to move money from a bank in country A to a bank in country B.

The U.S. kicked Iran out of SWIFT in 2012. This crippled Iran’s international trade. It also showed that the U.S. could use SWIFT as a political weapon. The BRICS countries want their own system so they can neutralize that power.

AIIB, NDB, and the potential SWIFT alternative are the seeds of a parallel international financial system. Together, they will reduce the importance and demand for U.S. dollars.

What it Means for You

Today, most international trade is done in U.S. dollars. When one country wants to trade with another, it almost always has to buy U.S. dollars on the foreign exchange market first. This creates demand for U.S. dollars – much more than there would be otherwise. That boosts the value of the dollar.

Imagine how much this arrangement props up the U.S. dollar. It’s incredible.

This arrangement has allowed the U.S. government (and U.S. citizens) to live way beyond its means for decades. It also gives the U.S. unchecked geopolitical leverage. The U.S. could exclude virtually any country from the U.S. dollar-based financial system…and by extension the vast majority of international trade.

The U.S. takes this unique position for granted. But it will disappear once the dollar loses its premier status.

This will likely be the tipping point…

Afterward, the U.S. government will be desperate enough to implement capital controls, people controls, nationalization of retirement savings, and other forms of wealth confiscation.

It would be wise to prepare for the economic and sociopolitical fallout while you still can. Expect bigger government, less freedom, shrinking prosperity…and possibly worse.

It’s probably not going to happen tomorrow. But it’s clear where the bankrupt governments of the U.S. and most of the West are headed.

Once the dollar loses its status as the world’s premier reserve currency, you will have few, if any options, to protect yourself.

This is why it’s essential to act before that happens.

If Putin continues to outmaneuver the U.S. on the geopolitical chessboard, the dollar could collapse sooner rather than later.

The sad truth is, most people have no idea how bad things could get, let alone how to prepare…

There are straightforward steps you can start taking today to protect your savings and yourself. You don’t have to be on the losing team in this high-stakes chess match with Putin.

Nick is Doug Casey's globetrotting companion and is the Senior Editor of Casey Research's International Man. He writes about economics, offshore banking, second passports, value investing in crisis markets, geopolitics, and surviving a financial collapse, among other topics. He is a CFA charterholder. In short, Nick's work helps people make the most of their personal freedom and financial opportunity around the world. To get his free video crash course, click here.